Ryan Company owns 80% of Chase Company. The original balances presented for Ryan and Chase as of January 1, 2013, are as follows: Assume Chase issues 30,000 additional shares common stock solely to Ryan for $12 per share.
What is the new percent ownership Ryan owns in Chase?
A) 80.0%.
B) 87.5%.
C) 90.0%.
D) 75.0%.
E) 82.5%.

Question

Ryan Company owns 80% of Chase Company. The original balances presented for Ryan and Chase as of January 1, 2013, are as follows:  Assume Chase issues 30,000 additional shares common stock solely to Ryan for $12 per share.
What is the new percent ownership Ryan owns in Chase?
A) 80.0%. 
B) 87.5%. 
C) 90.0%. 
D) 75.0%. 
E) 82.5%.

Quizplus · Accepted Answer

Shares Outstanding 50,000 × .80 = 40,000 Parent's Shares50,000 + 30,000 = 80,000 New Outstanding Shares40,000 + 30,000 = 70,000 Parent's Shares after New Issue70,000/80,000 = 87.5% New Ownership Percentage

Ryan Company Owns 80% of Chase Company